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VOL. 127 | NO. 197 | Tuesday, October 9, 2012

American Airlines: Key Revenue Number Rises

DAVID KOENIG | AP Airlines Writer

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DALLAS (AP) – American Airlines parent AMR Corp. said Monday that a key revenue measure rose 4 percent in September although traffic declined as the carrier struggled with widespread flight delays and cancellations.

American's improvement in the revenue statistic beat the results of several other large U.S. airlines.

Virasb Vahidi, AMR's chief commercial officer, said American benefited from recent revenue-sharing deals with British Airways and Japan Airlines and from strong demand for travel to Latin America.

But Vahidi acknowledged that September flight delays and cancelations, which American blamed on some pilots conducting an illegal work slowdown, cost the airline money. Some displaced passengers had to be booked on other airlines and bookings suffered.

In the second half of September, "there was a loss of revenue associated with closer-in bookings," he said. "That's a loss of revenue that wasn't necessarily driven by cancelations, but driven by the operational challenges."

Vahidi declined to say how much revenue and bookings suffered but said AMR would provide more details next week, when it releases third-quarter financial results.

American and its American Eagle regional-flying affiliate reported the increase in passenger revenue per available seat mile. Airlines and their investors watch the figure closely as a sign of pricing power and full planes.

AMR said the increase would have been even greater, 4.4 percent, without the high number of delays and cancellations. The revenue usually rises when airlines cancel flights because they crowd more passengers on the remaining flights.

The revenue measure fell by 2 to 3 percent at Southwest. At Delta, it rose 0.5 percent, but the airline had expected an increase of 1 to 3 percent, and the number was flat at US Airways.

AMR's traffic, however, fell 2.8 percent, with most of the decrease on American, which saw a jump in cancelations and a drop in on-time arrivals.

Paying passengers flew 10.76 billion miles on American and Eagle last month, down from 11.07 billion miles in September 2011. Traffic on flights within the U.S., where most of the cancellations occurred, tumbled 7.1 percent, while international traffic rose 3.2 percent from a year earlier.

American and Eagle cut passenger-carrying capacity by 3.4 percent. Some of that was planned – American announced it would cut capacity by up to 2 percent through October as it dealt with a shortage of pilots – and some was due to last-minute flight cancellations.

With the reduction in capacity, there were fewer empty seats. The average September flight was 81.1 percent full, compared with 80.7 percent a year earlier.

Fort Worth, Texas-based AMR filed for bankruptcy protection in November. The company has been cutting labor expenses and other costs to emerge as a moneymaking operation, which has angered its union employees. Pilots were scheduled to picket Monday in New York to express their unhappiness with AMR management.

US Airways Group Inc. is pushing for a merger with American to create a larger airline that could compete with United and Delta, but AMR leaders have shown little interest.

Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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